By Lauren Stanforth

Updated 10:53 pm, Monday, November 11, 2013

The county is still trying to extract possibly more than $1 million from the city for not reimbursing unpaid property taxes — money the City Council's finance chairman said Schenectady does not have.

Earlier this year the county threatened to file a lawsuit for the money, which Schenectady normally paid every year to make up for the city property owners who failed to pay county taxes.

But under then-Mayor Brian U. Stratton, the city stopped making the county whole, ending the payments in 2011. The following year, Mayor Gary McCarthy paid the 2011 tab of $1 million after the county said the city did not end the payment legally. At the time, the payment drained the city's rainy day fund down to almost zero.

The county is still going after the city for the 2012 payment, which City Attorney John Polster said is around $1 million.

Stratton wanted to end such payments because the lucrative business of the city selling its tax liens disappeared in the wake of the 2009 recession. And unlike in decades past, the city can only collect about 85 percent of taxes owed and shouldn't be required to pay the county at 100 percent.

McCarthy said that he wants to pay the county the 2012 bill and simply devise a system under which the city would reimburse the county as taxes are collected or property is foreclosed on. County and city government are both controlled by the Democratic Party.

The mayor said the payback number is lower than $1 million because the city has already paid the county with incoming 2012 collections, and the payback wouldn't squeeze the city because the money was budgeted in 2013. However, the 2013 budget has nothing where the "allowance/county whole" line appears. When asked about the money, McCarthy said "it's there," but he didn't specify where in the budget it can be found.

Despite McCarthy's wants, he said not everyone on City Council agrees. City Council member and Democrat Carl Erikson, who is chairman of the council's finance committee said the city is in its legal right to not pay the county the whole amount of back taxes, and should instead just reimburse it as it collects the 2012 bills. Erikson said the city does not have the money budgeted to pay the county back and would have to dip into its meager reserves — or even borrow — to make the payment. Polster said devising a "payment plan" is also an option being discussed.

"None of them are good financial moves," said Erikson. "It would be painful to make that kind of payment."

Schenectady County Attorney Chris Gardner would not provide details on the negotiations but said they are "delicate."

"We're hopeful in the next month we'll come to some sort of resolution," Gardner said.